KARACHI: Pakistan’s debt profile is “alarming” while the country’s borrowing and spending habits were “unsustainable”, according to a report released by Islamabad-based think tank Tabadlab.

The 68-page report, titled ‘A raging fire: Pakistan’s debt crisis’, was released on Sunday, reported Dawn.com. It said that the country’s total debt and liabilities — including domestic and external debt — to be at Rs77.66 trillion, or $271.2 billion in 2023.

The report said that Pakistan’s external debt was primarily borrowed from a range of creditors: Paris Club (6.3 per cent), multilaterals (30.1pc), other bilateral (19.1pc), commercial banks and T-bills (4.9pc), Eurobonds (6.3pc), the International Monetary Fund (5.7pc), banks (5.1pc) and private sector liabilities (12.7pc).

It noted that Pakistan’s debt per capita had also grown from $823 in 2011 to $1,122 in 2023, a 36pc increase in 12 years. At the same time, the country’s gross domestic product (GDP) per capita had declined from $1,295 in 2011 to $1,223 in 2023, a 6pc decrease. It stated that this meant that the country’s debt was growing “at a much larger pace than its income, widening financing gaps [and] necessitating further borrowing”.

The report said that since 2011, Pakistan’s external debt had nearly doubled while the domestic debt had increased by six-fold, of which the country would need to pay back an estimated $49.5bn in debt maturities — 30pc of it being interest.

“Debt accumulation has been overwhelmingly used to continue fostering a consumption-focused, import-addicted economy, without investment in productive sectors or industry,” the report said. It said that this raised alarm bells over the country’s debt profile, and its borrowing and spending habits termed “unsustainable”.

It noted the increasing demands of a growing population — such as social protection, education and health — and climate change-related disasters which needed “adaptation strategies and a transition to green energy”.

Published in Dawn, February 20th, 2024